Lesson: Stock Surrender and Stock Redemption

In this lesson, navigate through the intricacies of stock surrender and stock redemption with Nick Palazzolo, CPA, as a succinct guide. From a clearly illustrated example, grasp the nuances of stock surrender, where a shareholder gives up shares and recognizes income based on the difference between fair market value received and their stock's adjusted basis. Transition smoothly into the concept of stock redemption, learning when such transactions are treated as either capital transactions or dividend income, taking cues from the proportionality of share distribution and its effect on ownership percentages. Complete with practical examples and a memorization aid, this lesson demystifies these two vital concepts and their implications for recognizing income on the exchange of corporate stock.